Fed’s rate cut may delay with federal government shutdown

ISTANBUL

The federal government shutdown in the US could lead to the failure of key agencies and government institutions to release data, which could delay the Fed’s rate cut decisions.

The US federal government shut down as Congress did not approve a temporary budget bill before the start of the new fiscal year -- it is the first time since 2019 that the US government shut down.

In a government shutdown, the federal government loses its spending authority and has to suspend all non-essential activities. Federal workers in non-essential services are placed on unpaid leave, while essential workers for the US military, intelligence agencies, public hospitals, airports, and prison facilities continue working unpaid.

Sant Manukyan, deputy general manager of Türkiye-based IS Investment, told Anadolu that the US Treasury requires $700 billion in its account to take precautions, though it currently holds even more than that.

Manukyan stated that the federal government shutdown may not bring “much of a problem,” as a similar situation happened during US President Donald Trump’s first term.

“The failure of key institutions to release data due to the shutdown could result in a postponing of any rate cut decision previously planned,” he said.

He added that some data could be compensated by firms like Automatic Data Processing Inc and the Institute for Supply Management.